8.2 A Simple Two-period Model o Assumption of the model Life is made up of two periods: the youth and the aged Income is made up of two parts: wealth wages, with no positive wealth at the beginning and the end o Optimal objects Given the present income future income, decide the consumption of the present and the future to maximize their intercourse inter temporal utility 友学经济学院
8.2 A Simple Two-period Model Assumption of the model ❖ Life is made up of two periods：the youth and the aged ❖ Income is made up of two parts ：wealth & wages，with no positive wealth at the beginning and the end Optimal objects： ❖ Given the present income & future income, decide the consumption of the present and the future to maximize their intercourse intertemporal utility
8.2 A Simple Two-period Model o inter-temporal constraint 2=01+ 1+r) (1+r) C1 C2 is respectively the first-period the second-period consumption; Q1, Q2 is respectively the periods wages o inter-temporal utility function U(C1, C2)( convex) 友学经济学院
8.2 A Simple Two-period Model inter-temporal constraint C1、C2 is respectively the first-period & the second-period consumption；Q1、Q2 is respectively the periods’ wages inter-temporal utility function U（C1，C2）（convex） （1 r） Q Q 1 r C C 2 1 2 1 + = + + + ( )